ISDA, Which Refuses To Declare Greece In Default, Has Given The US A 3 Day Grace Period Before A CDS Trigger

ISDA is rapidly deteriorating to rating agency status when it comes to credibility. After it made it all too clear in the past few weeks that no matter what happens it would never "determine" Greece (or any other European insolvent country) to have breached a CDS trigger (as that would apparently destroy the world), the same trade association (logically enough comprised of the same firms that make up the heart of the status quo) has joined the rating agencies, and as of last night the CME, in making it all too clear that a debt ceiling plan (preferably Reid's because it achieves absolutely nothing) has to pass, or else, after it earlier announced that the US has precisely 3 days to cure any missed debt payment before US CDS are triggered. Obviously this can not be allowed to happen, so expect this latest development to be used by the president in his nighlty scaremongering session.

From Reuters:

The United States would have at least 3 days to make up for any missed debt payments before it triggered payments on its credit default swaps, according to trade association the International Swaps and Derivatives Association.


There has been some confusion over whether the United States would trigger an estimated $4.77 billion in payments on its CDS if it skips a bond payment as it runs up against an Aug. 2 deadline when the Treasury has warned it will run out of cash.


The Treasury would have at least 3 days to cure any default, under CDS document rules, Steven Kennedy, global head of communications at the association in New York, said on Tuesday.


"This grace period would apply if there was no grace period or if the grace period was less than three business days under the terms of the reference entity obligation," he said.

Zero Hedge will update today's weekly DTCC data on gross and net CDS notional when it is released around 8 pm tonight.